Renting & Buying Homes

The Rental Agreement The Rental Agreement Renting & Buying HomesRenting & Buying Homes

Understanding Business and Personal Law

The Rental Agreement The Rental Agreement Section 33.1Section 33.1

Renting a Place to Live

Section 33.1Section 33.1The Rental Agreement The Rental Agreement

Section 33.2Section 33.2Responsibilities of Landlord and Tenant Responsibilities of Landlord and Tenant

3333ChapterChapter Renting a PlaceRenting a Placeto Live to Live




What You’ll Learn

How to define the main types of tenancies How to define the main types of tenancies available to persons who rent real property available to persons who rent real property (p. 712)(p. 712)

How to describe some of the common How to describe some of the common covenants found in a lease (p. 714)covenants found in a lease (p. 714)




What You’ll Learn

How to summarize rent control laws How to summarize rent control laws (p. 718)(p. 718)




Why It’s Important

Knowing all you can about rental agreements Knowing all you can about rental agreements and the types of tenancies will help you and the types of tenancies will help you choose a place to live and know how to choose a place to live and know how to address disputes that may arise.address disputes that may arise.




Legal Terms

lessee (p. 712)lessee (p. 712)lessor (p. 712)lessor (p. 712)tenancy (p. 712)tenancy (p. 712)tenancy for years (p. 713)tenancy for years (p. 713)periodic tenancy (p.713)periodic tenancy (p.713)




Legal Terms

rent day (p. 713)rent day (p. 713)tenancy at will (p. 714)tenancy at will (p. 714)tenancy at sufferance (p. 714)tenancy at sufferance (p. 714)lease (p. 714)lease (p. 714)sublease (p. 716)sublease (p. 716)




Tenancy Types of Tenancies

Section OutlineSection Outline

Tenancy for YearsPeriodic TenancyTenancy at WillTenancy at Sufferance




The Lease Agreement Terms in a Lease


Rent Control




Pre-Learning Question Pre-Learning Question

What is a tenant?




Tenancy Tenancy

If you rent real property, such as an If you rent real property, such as an apartment or house, you are a apartment or house, you are a tenant.tenant.If you own real property and rent it If you own real property and rent it to someone else, you are a to someone else, you are a landlord.landlord.




Tenancy Tenancy

The contract between a tenant and a The contract between a tenant and a landlord is called a lease. landlord is called a lease.

In a lease, the tenant is known as the In a lease, the tenant is known as the lesseelessee, and the landlord is the , and the landlord is the lessorlessor..




33.133.1

What to Look for What to Look for in Selecting an Apartmentin Selecting an Apartment

Location Near school, work Near church, mosque,

synagogue Near shopping Near public

transportation Near recreation: parks,

museums




33.133.1


Finances Amount of monthly rent Amount of security

deposit Cost of utilities Length of lease




33.133.1


Building Condition of building and

grounds Parking facilities Recreation on premises Security system Condition of hallways,

stairs, and elevators Access to mailboxes




33.133.1


Layout and Facilities Size and condition of unit Type and controls of heating

and cooling systems Plumbing and water

pressure Type and condition of

appliances Condition of doors, locks,

windows, closets, and floors





What is a tenancy?




Although they rent from someone Although they rent from someone else, tenants own an interest in the else, tenants own an interest in the real estate they lease, called a real estate they lease, called a leasehold estate or leasehold estate or tenancytenancy..

Types of Tenancies Types of Tenancies




Types of Tenancies Types of Tenancies

The types of tenancies are The types of tenancies are

Tenancy for yearsTenancy for yearsPeriodic tenancyPeriodic tenancyTenancy at willTenancy at willTenancy at sufferanceTenancy at sufferance




Tenancy for Years Tenancy for Years

A A tenancy for yearstenancy for years is the right to is the right to occupy property for a definite or fixed occupy property for a definite or fixed period of time. period of time.

It may be for one week or 99 years, as It may be for one week or 99 years, as long as the time period is definite. long as the time period is definite.




A A periodic tenancyperiodic tenancy, also called a , also called a tenancy from year to year (or month to tenancy from year to year (or month to month, or week to week), is a tenancy month, or week to week), is a tenancy that continues for successive fixed that continues for successive fixed periods. periods.

Periodic Tenancy Periodic Tenancy





One of the parties may terminate this One of the parties may terminate this tenancy by giving advance notice to tenancy by giving advance notice to the other party.the other party.





The notice requirement differs from The notice requirement differs from state to state, but it is often the period state to state, but it is often the period between rent days. between rent days.

The The rent dayrent day is the day on which the is the day on which the rent is due.rent is due.




Tenancy at Will Tenancy at Will

A A tenancy at willtenancy at will is an interest in real is an interest in real property that continues for an property that continues for an indefinite period of time. indefinite period of time.

No written agreement is required to No written agreement is required to create this tenancy.create this tenancy.




Tenancy at Will Tenancy at Will

It is terminated when either the It is terminated when either the landlord or the tenant gives the notice landlord or the tenant gives the notice required by state laws, which is required by state laws, which is usually 30 days.usually 30 days.




Tenancy at Sufferance Tenancy at Sufferance

A A tenancy at sufferancetenancy at sufferance arises when arises when a tenant doesn’t leave the premises a tenant doesn’t leave the premises after his or her tenancy has expired. after his or her tenancy has expired.




Tenancy at Sufferance Tenancy at Sufferance

This situation often occurs when a This situation often occurs when a tenancy for years expires or when a tenancy for years expires or when a tenancy at will has been properly tenancy at will has been properly terminated by the landlord but the terminated by the landlord but the tenant remains in possession.tenant remains in possession.




Jill Stunzi signed a lease to rent an apartment for six months. What type of tenancy has she agreed to?




ANSWERANSWER

Tenancy for years.




Jamal Youngston has an oral agreement with Mary O’Donnell to rent her basement apartment until he graduates from college. What type of tenancy has he agreed to?




ANSWERANSWER

Tenancy at will.




Marcus Kennedy is a contract painter and often works for weeks on end away from home. During these times he often rents a hotel room from week to week. What type of tenancy is he agreeing to?




ANSWERANSWER

Periodic tenancy.





What is a lease agreement?




The Lease Agreement The Lease Agreement

A written agreement between a lessor A written agreement between a lessor and a lessee is called a and a lessee is called a leaselease. The . The lease creates the landlord-tenant lease creates the landlord-tenant relationship. It provides the tenant with relationship. It provides the tenant with exclusive possession and control of exclusive possession and control of the real property of the landlord.the real property of the landlord.




Terms in a Lease Terms in a Lease

The terms of a lease, known as The terms of a lease, known as covenants, set forth the rights and covenants, set forth the rights and duties of the landlord and tenant. duties of the landlord and tenant.




Terms in a Lease Terms in a Lease

Common terms, or covenants, found Common terms, or covenants, found in a lease include in a lease include

Security depositSecurity depositDecoration and repairsDecoration and repairsAssignment and sublettingAssignment and sublettingOption to renew or to purchase Option to renew or to purchase




Security Deposit Security Deposit

Landlords often require you to pay a Landlords often require you to pay a security deposit and the last month’s security deposit and the last month’s rent at the beginning of a tenancy in rent at the beginning of a tenancy in order to secure the payment of rent or order to secure the payment of rent or repairs for damages to the property.repairs for damages to the property.




Decoration and Repairs Decoration and Repairs

The landlord has no obligation to The landlord has no obligation to decorate the premises, unless the decorate the premises, unless the lease says so or it is required by lease says so or it is required by statute or local ordinance. statute or local ordinance.




Decoration and Repairs Decoration and Repairs

However, the landlord must make any However, the landlord must make any repairs necessary to keep the repairs necessary to keep the premises fit for living. This includes premises fit for living. This includes repairs such as fixing a leaky roof or a repairs such as fixing a leaky roof or a broken furnace.broken furnace.




Assignment and Subletting Assignment and Subletting

An assignment of a lease occurs An assignment of a lease occurs when you transfer the remaining when you transfer the remaining period of time in a lease to someone period of time in a lease to someone else.else.





A A subleasesublease occurs when you transfer occurs when you transfer part of the term of lease, but not the part of the term of lease, but not the remainder of it, to someone else.remainder of it, to someone else.





If a landlord doesn’t want a tenant to If a landlord doesn’t want a tenant to assign or sublet the property, a assign or sublet the property, a covenant in the lease must say that. covenant in the lease must say that.

Otherwise, a tenant may either assign Otherwise, a tenant may either assign or sublet the property to someone or sublet the property to someone else.else.




Option to Renew or to Purchase Option to Renew or to Purchase

The option to renew the lease gives The option to renew the lease gives renters the right to a new lease, under renters the right to a new lease, under the same terms, for an additional the same terms, for an additional period.period.




Option to Renew or to Purchase Option to Renew or to Purchase

The option to purchase the property is The option to purchase the property is an agreement by the lessor to sell the an agreement by the lessor to sell the property to the lessee for a stated property to the lessee for a stated price.price.





What is rent control?




Some large communities have passed Some large communities have passed rent control laws to keep rent within an rent control laws to keep rent within an affordable range. affordable range.

Rent Control Rent Control




These laws limit what landlords can These laws limit what landlords can charge for rental property and also charge for rental property and also often contain procedures that must be often contain procedures that must be followed before tenants can be followed before tenants can be evicted.evicted.

Rent Control Rent Control




Reviewing What You Learned

1. What is the difference between a tenancy for years, a periodic tenancy, and a tenancy at will?

Section 33.1 Assessment





A tenancy for years is for a fixed time period. A periodic tenancy continues for successive periods until one of the parities ends it by giving proper notice.


Answer





A tenancy at will is for an indefinite time period and is often an oral agreement.


Answer





2. Name the common covenants found in a lease.






Security deposit, decoration and repairs, assignment and subletting, and option to renew or to purchase.


Answer





3. Explain rent control laws.






Rent control laws exist to keep rents within an affordable range. The laws limit the amount of rent the landlords may charge for rental property.


Answer





They often contain procedures that must be followed before tenants can be evicted.


Answer





Critical Thinking ActivityLeasing Terms Imagine you are ready to rent a place to live. Make a list of covenants you would want in your lease, and explain why you would want these covenants.





Critical Thinking Activity AnswerLeasing Terms Answers will vary, but should reflect an understanding of the term covenant.





Legal Skills in ActionMaintaining the Premises The grounds surrounding the apartment complex where you live are full of trash. The grass hasn’t been mowed for weeks, and it looks pretty shabby.





Legal Skills in ActionMaintaining the Premises You’ve mentioned the problem to the landlord, but no action has been taken. Write a petition to circulate among the tenants to ask the landlord to hold a meeting to discuss the difficulty.





Legal Skills in Action AnswerMaintaining the Premises Petitions will vary, but should include the duties of the landlord in regards to the grounds of the property.

The Rental Agreement The Rental Agreement End of Section 33.1End of Section 33.1





Section 34.1Section 34.1Evaluating Housing Alternatives Evaluating Housing Alternatives

Section 34.2Section 34.2The Home Buying Process The Home Buying Process

3434ChapterChapter Buying a HomeBuying a Home




What You’ll Learn

How to compare the advantages and How to compare the advantages and disadvantages of buying a home (p. 730)disadvantages of buying a home (p. 730)

How to determine the amount of down How to determine the amount of down payment you will need and the payment you will need and the approximate amount you can borrow to approximate amount you can borrow to buy a home (p. 730)buy a home (p. 730)




What You’ll Learn

How to describe various types of How to describe various types of home ownership (p. 733)home ownership (p. 733)





Being able to evaluate housing alternatives Being able to evaluate housing alternatives will help you to decide whether to purchase a will help you to decide whether to purchase a home.home.




Legal Terms

mortgage (p. 730)mortgage (p. 730)equity (p. 730)equity (p. 730)debt ratio (p. 731)debt ratio (p. 731)cooperative (p. 735)cooperative (p. 735)condominium (p. 735)condominium (p. 735)




Deciding to Buy a Home Section OutlineSection Outline

Advantages to Home BuyingDisadvantages to Home BuyingHow Much Can You Afford?




Types of Home Ownership Single- and Multifamily HomesMobile HomesCooperativesCondominiums






What do you do before deciding to buy a home?




Deciding to Buy a Home Deciding to Buy a Home

Buying a home may be the most Buying a home may be the most important purchase you will ever important purchase you will ever make. make.





You will need to:You will need to:

Weigh the advantages and Weigh the advantages and disadvantages.disadvantages.Consider how much you can afford.Consider how much you can afford.Determine the type of house will Determine the type of house will best fit your needs.best fit your needs.





Most people take out a mortgage to Most people take out a mortgage to help with the costs. help with the costs.

A A mortgagemortgage is a written instrument by is a written instrument by which the buyer (the mortgagor) which the buyer (the mortgagor) pledges real property to the lender pledges real property to the lender (the mortgagee) as security for a loan.(the mortgagee) as security for a loan.




Advantages to Home Buying Advantages to Home Buying

There are several advantages to There are several advantages to buying a home. buying a home.

One is the ability to do with it as you One is the ability to do with it as you wish without having to answer to wish without having to answer to another owner.another owner.





Another advantage is the increase in Another advantage is the increase in equityequity, or the difference between the , or the difference between the fair market value and the mortgage, in fair market value and the mortgage, in the property. Equity increases as you the property. Equity increases as you pay off the mortgage and as the pay off the mortgage and as the property increases in value.property increases in value.





A third advantage is that you can A third advantage is that you can deduct property taxes and interest deduct property taxes and interest paid on your mortgage from your paid on your mortgage from your income tax return.income tax return.




Disadvantages to Home Buying Disadvantages to Home Buying

There are some disadvantages.There are some disadvantages.

The inconvenience and cost of The inconvenience and cost of upkeep.upkeep.The inability to move easily and The inability to move easily and quickly if necessary.quickly if necessary.




How Much Can You Afford? How Much Can You Afford?

To determine how much you can To determine how much you can afford to pay for a house, you must afford to pay for a house, you must consider: consider:

The amount of down payment.The amount of down payment.The amount you can borrow based The amount you can borrow based on your income and expenses.on your income and expenses.




Down Payment Down Payment

Down-payment requirements range Down-payment requirements range from zero to 30 percent of the from zero to 30 percent of the purchase price. purchase price.




34.134.1

Down PaymentDown Payment

0 percent

3 percent

3 to 5

percent

10 to 30

percent

Veteran’s Administration (VA) loans

(for qualified veterans to buy a house up to $203,000)

Mortgages backed by federal agencies, such as Fannie

Mae and Freddy Mac

FHA loans (loans insured by the Federal Housing

Administration)

Conventional bank loans

Type of Loan Down Payment




Loan Qualifications Loan Qualifications

A lender will judge your ability to repay A lender will judge your ability to repay your loan based on your credit report your loan based on your credit report and your and your debt ratiodebt ratio, or the amount of , or the amount of your monthly payments compared to your monthly payments compared to your monthly income.your monthly income.





Your mortgage payment, including Your mortgage payment, including taxes and insurance, should not taxes and insurance, should not exceed 28 percent of your monthly exceed 28 percent of your monthly gross income.gross income.





Total monthly debt payments Total monthly debt payments (including your new mortgage, credit (including your new mortgage, credit cards, car payments, and so on) cards, car payments, and so on) should not exceed 36 percent of your should not exceed 36 percent of your income.income.




The Elements of Buying a House The Elements of Buying a House

It’s important to consider the following It’s important to consider the following issues when making a home issues when making a home purchase:purchase:

LocationLocationDown paymentDown paymentMortgage rates and points Mortgage rates and points




The Elements of Buying a House The Elements of Buying a House

Closing costsClosing costsMonthly paymentsMonthly paymentsMaintenance costs Maintenance costs





What are some different types of homes a person can own?




You have many choices in selecting a You have many choices in selecting a home, depending on how much you home, depending on how much you can afford and the desired size of the can afford and the desired size of the house and its location. house and its location.

Types of Home Ownership Types of Home Ownership




Different types include:Different types include:

Types of Home Ownership Types of Home Ownership

Single-family homesSingle-family homesMultifamily homesMultifamily homesMobile homesMobile homesCooperativesCooperativesCondominiumsCondominiums




Single-family homes are the most Single-family homes are the most popular type of home.popular type of home.They offer privacy and more overall They offer privacy and more overall usable space than other types of usable space than other types of housing. housing.

Single- and Multifamily Homes Single- and Multifamily Homes




Multifamily dwellings are less Multifamily dwellings are less expensive to own because of the expensive to own because of the income from nonowner-occupied income from nonowner-occupied units.units.The owner’s monthly mortgage and The owner’s monthly mortgage and tax payments can often come from tax payments can often come from rental income.rental income.

Single- and Multifamily Homes Single- and Multifamily Homes




Mobile homes are also known as Mobile homes are also known as manufactured homes.manufactured homes.They are less expensive to They are less expensive to purchase and to keep up.purchase and to keep up.They usually can be sold quickly They usually can be sold quickly and easily.and easily.

Mobile Homes Mobile Homes




A A cooperativecooperative (co-op) is a form of (co-op) is a form of home ownership in which buyers home ownership in which buyers purchase shares in the corporation purchase shares in the corporation that owns an apartment building and that owns an apartment building and holds the mortgage on it.holds the mortgage on it.

Cooperatives Cooperatives




Shareholders have a proprietary lease Shareholders have a proprietary lease that gives them the right to the that gives them the right to the individual units.individual units.

Cooperatives Cooperatives




In a In a condominiumcondominium (often called a (often called a condo), each owner has an absolute condo), each owner has an absolute individual interest in an apartment unit individual interest in an apartment unit and an undivided common interest in and an undivided common interest in the common areas of the condo the common areas of the condo project.project.

Condominiums Condominiums




Match the type of home with its description.

1. Multi-family home2. Cooperative3. Condominium4. Mobile home




a) A situation in which each owner has an absolute individual interest in an apartment unit and an undivided common interest in the common areas.




b) A situation in which buyers purchase shares in the corporation that owns an apartment building and holds the mortgage on it.




c) Also known as a manufactured home.




d) Less expensive to own than a single-family home because of the income from nonowner-occupied units.




ANSWERANSWER

1. Multi-family home (d)2. Cooperative (b)3. Condominium (a)4. Mobile home (c)





1. What are the advantages and disadvantages of buying a home?






Advantages—the ability to do with it as you wish; equity build up; ability to deduct property taxes and interest paid on your mortgage from your income tax return.


Answer





Disadvantages—the inconvenience and cost of upkeep and the inability to move easily and quickly.


Answer





2. Is it possible to buy a home with no down payment? Explain your answer.






Yes. Qualified veterans can obtain a VA (Veteran’s Administration) loan to buy a house up to $203,000 with no down payment.


Answer





3. Describe the five types of home ownership.






(1) Single-family—offer the most privacy and usually have more usable space than other types of house. (2) Multi-family—are less expensive to own because of the income from nonowner-occupied units.


Answer





(3) Mobile homes—also known as manufactured homes, are less expensive to purchase than ordinary houses and cost less to keep up. They can usually be sold quickly and easily.


Answer





(4) Cooperatives—buyers purchase shares in the corporation that owns an apartment building and holds the mortgage on it.


Answer





(5) Condominiums—each owner has an absolute individual interest in an apartment unit and an undivided common interest in the common areas of the condo project.


Answer





Critical Thinking ActivityLender Criteria If you were planning to borrow money to buy a home, why would your employment history be important to a lender?





Critical Thinking Activity AnswerLender Criteria Answers will vary, but should include that a lender will want to judge your ability to repay your loan based on different criteria such as your employment history, credit report, and your debt ratio.





Legal Skills in ActionCalculating the Down Payment Using the following scenarios, determine the down payment required on a house that costs $203,000. (Assume all other costs are already included.)





Legal Skills in ActionCalculating the Down Payment • VA loan to a qualified veteran• Fannie Mae loan: 3 percent• FHA loan: 4.5 percent• Conventional loan: 15 percent





Legal Skills in Action AnswerCalculating the Down Payment • VA loan—no down payment• 3 percent loan—$203,000 x .03 = $6,090• 4.5 percent loan—$203,000 x .045 = $9,135• 15 percent loan—$203,000 x .15 = $30,450






What You’ll Learn

How to identify some suggestions to follow How to identify some suggestions to follow before signing a contract a buy house (p. before signing a contract a buy house (p. 736)736)

How to describe different types of How to describe different types of mortgages (p. 737)mortgages (p. 737)




What You’ll Learn

How to compare the types of co-How to compare the types of co-ownership of real property (p. 740)ownership of real property (p. 740)

How to discuss the various deeds in How to discuss the various deeds in common use (p. 741)common use (p. 741)




What You’ll Learn

How to explain ways that title to property How to explain ways that title to property can be lost (p. 745)can be lost (p. 745)





Knowing about the home-buying process will Knowing about the home-buying process will make the experience easier for you when make the experience easier for you when that time comes.that time comes.




Contracting to Buy a House Applying for a Mortgage


Types of MortgagesFederal Protection




Taking Ownership Co-ownershipDeeds





Limitations on Property Use Zoning LawsEminent DomainAdverse PossessionEasements






What happens when you contract to buy a house?




Contracting to Buy a House Contracting to Buy a House

When you contract to buy a house, When you contract to buy a house, you are entering into a purchase and you are entering into a purchase and sale agreement with the seller. sale agreement with the seller.

The agreement should be subject to The agreement should be subject to your getting a mortgage to purchase your getting a mortgage to purchase the property.the property.




Contracting to Buy a House Contracting to Buy a House

To obtain the best legal protection, To obtain the best legal protection, have a lawyer review the agreement have a lawyer review the agreement before signing it.before signing it.




34.234.2

Average Sales Prices of New Average Sales Prices of New Single-Family HomesSingle-Family Homes




Applying for a Mortgage Applying for a Mortgage

Lenders need security, a way of Lenders need security, a way of getting their money back in case the getting their money back in case the borrower does not pay. The mortgage borrower does not pay. The mortgage is a way to satisfy this need.is a way to satisfy this need.





If the buyer, or mortgagor, pays the If the buyer, or mortgagor, pays the money back as agreed, then the money back as agreed, then the mortgage is discharged and the mortgage is discharged and the homeowner owns the property homeowner owns the property outright.outright.





If the mortgagor does not pay the If the mortgagor does not pay the money back according to the terms of money back according to the terms of the agreement, the lender, or the agreement, the lender, or mortgagee, can have the property mortgagee, can have the property sold to pay off the loan.sold to pay off the loan.




Types of Mortgages Types of Mortgages

Because different lenders charge Because different lenders charge different interest rates, you can save different interest rates, you can save money by shopping around for a money by shopping around for a mortgage. There is a variety of mortgage. There is a variety of creative financing available.creative financing available.




34.234.2

Types of Mortgages Types of Mortgages

Fixed-rate

mortgage

Adjustable-rate

mortgage (ARM)

Graduated-

payment mortgage

Balloon-payment

mortgage

The rate stays the same throughout the life of the

mortgage, but requires a large down payment.

The rate moves up and down, following an index to

which it is tied.

The rate is fixed during the life of the mortgage, but

monthly payments increase over the life of the loan.

Has relatively low fixed payments during the life of the

mortgage, but is followed by one large final (balloon)

payment.




Federal Protection Federal Protection

The Real Estate Settlement The Real Estate Settlement Procedures Act (RESPA), a federal Procedures Act (RESPA), a federal law, gives you protection when you law, gives you protection when you apply for a loan. apply for a loan.




Federal Protection Federal Protection

Under RESPA, the lender must give Under RESPA, the lender must give you you

A booklet that explains the real A booklet that explains the real estate settlement procedureestate settlement procedureAn estimate of the costs that you An estimate of the costs that you will incur in obtaining the loanwill incur in obtaining the loanA truth-in-lending statementA truth-in-lending statement





What are some different types of property ownership?




Ownership of property can be taken in Ownership of property can be taken in your name alone or with someone your name alone or with someone else as a co-owner. There are else as a co-owner. There are different types of co-ownership as well different types of co-ownership as well as different types of deeds in common as different types of deeds in common use.use.

Taking Ownership Taking Ownership




There are three main ways that you There are three main ways that you can own real property with others. can own real property with others.

Co-ownership Co-ownership

1.1. Tenancy in commonTenancy in common2.2. Joint tenancyJoint tenancy3.3. Tenancy by the entirety Tenancy by the entirety




Kim Wu, Xìn Weng, and Bob Potter want to buy a beach house in Hawaii together.




If each person wants his or her children to inherit the property upon his or her death, which type of co-ownership should they choose? Why?




ANSWERANSWER

Tenancy in common allows heirs to inherit.




If Kim and Lĭ Wu, a married couple, decide to buy a beach house, which type of co-ownership should they choose? Why?




ANSWERANSWER

Tenancy by the entirety allows for the surviving spouse to inherit.





Are there ever any limitations on property use? If so, what are they?




There are limitations on property use There are limitations on property use that may affect how you build on your that may affect how you build on your land, as well as how you can use it.land, as well as how you can use it.

Limitations on Property Use Limitations on Property Use




Real property is the ground and Real property is the ground and everything permanently attached to it.everything permanently attached to it.

The Nature of Real Property The Nature of Real Property




Real property includes Real property includes


BuildingsBuildingsFencesFencesTrees and perennial plants on the Trees and perennial plants on the surfacesurface




Earth, rocks, and minerals under Earth, rocks, and minerals under the surfacethe surfaceAirspace above the surface Airspace above the surface





Communities use ordinances and Communities use ordinances and bylaws to regulate the use of real bylaws to regulate the use of real property within their boundaries. Most property within their boundaries. Most cities and towns have cities and towns have zoning lawszoning laws that prescribe the use that may be that prescribe the use that may be made of property in specified areas.made of property in specified areas.

Zoning Laws Zoning Laws




Eminent domainEminent domain is the right of the is the right of the government to take private land, with government to take private land, with compensation to its owners, for public compensation to its owners, for public use.use.

Eminent Domain Eminent Domain




The government can take private land The government can take private land for such things as public buildings, for such things as public buildings, highways, school buildings, power highways, school buildings, power projects, housing projects, parks, and projects, housing projects, parks, and other public uses.other public uses.

Eminent Domain Eminent Domain




Ownership of real property can be lost Ownership of real property can be lost by by adverse possessionadverse possession. This loss . This loss occurs when someone who doesn’t occurs when someone who doesn’t own property takes possession of it for own property takes possession of it for a period set by state statute, such as a period set by state statute, such as twenty years.twenty years.

Adverse Possession Adverse Possession




The possession must be open, not The possession must be open, not secretive, with a claim that it is being secretive, with a claim that it is being done rightfully.done rightfully.

Adverse Possession Adverse Possession




An An easementeasement is the right to make is the right to make some use of another’s land. some use of another’s land.

EasementsEasements




Most often it is the right to cross Most often it is the right to cross someone else’s land at a particular someone else’s land at a particular place for a certain purpose such as a place for a certain purpose such as a driveway or for drainage.driveway or for drainage.

EasementsEasements




It may also be a right to erect poles It may also be a right to erect poles and suspend power lines over land or and suspend power lines over land or to lay pipelines beneath the surface. to lay pipelines beneath the surface.

EasementsEasements




Local governments and public utilities Local governments and public utilities frequently obtain easements to frequently obtain easements to construct service lines and roads.construct service lines and roads.

EasementsEasements





1. What should you do before you sign a contract to buy a house?






Have a lawyer review the agreement.


Answer





2. Describe the differences among a fixed-rate, an adjustable-rate, a graduated-payment, and a balloon-payment mortgage.






A fixed-rate mortgage stays the same throughout the life of the mortgage but requires a large down payment.


Answer





An adjustable-rate mortgage has an interest rate that moves up and down, following an index to which it is tied.


Answer





A graduated-payment mortgage has a fixed interest rate during the life of the mortgage, but the monthly payments increase over the life of the loan.


Answer





A balloon-payment mortgage has relatively low fixed payments during the life of the mortgage but is followed by one large final (balloon) payment.


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3. What is the difference between joint tenancy and tenancy by the entirety?






Joint tenancy: two or more people own an interest in the whole property. Tenancy by entirety: may only be held by a husband and wife, who are regarded by law as one.


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4. What types of deeds are discussed in this chapter? How are they alike? How are they different?






A special warranty deed contains express warranties that no defect arose in the title during the time that the grantor owned the property, but not before.


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